Crypto.com to Permit Loans Using Wrapped BTC and ETH via Morpho Integration
In a significant move toward bridging centralized exchanges and DeFi infrastructure, Crypto.com has announced plans to let users borrow against wrapped versions of Bitcoin (BTC) and Ethereum (ETH). The integration will be powered by Morpho, a decentralized lending protocol, and is slated to go live on the Cronos blockchain later in 2025.
What’s Changing: Wrapped Crypto as Collateral
Under the new setup, Crypto.com users will be able to deposit wrapped BTC (CDCBTC) or wrapped ETH (CDCETH) into Morpho “vaults.” These wrapped tokens mirror the value of the original assets but are compatible with the Cronos/EVM environment, enabling on-chain lending without leaving the Cronos network.
Once funds are deposited, users will have the ability to borrow stablecoins—essentially collateralized loans backed by their wrapped crypto holdings.
The aim is to make decentralized finance more accessible to users of Crypto.com’s platform by embedding DeFi functions directly into a familiar interface. As Morpho co-founder Merlin Egalite put it: “the goal is to provide a trusted user experience in the front, with DeFi infrastructure in the back.”
Why This Matters
1. Lower barrier to DeFi access
Many users are hesitant to deal with self-custodial wallets, bridging between chains, and navigating DeFi protocols. By integrating Morpho directly into Crypto.com, users can leverage DeFi lending without leaving a centralized interface.
2. Better capital efficiency
Instead of letting BTC or ETH sit idle, users can unlock liquidity via borrowing stablecoins while still holding their exposure to the underlying asset through wrapped collateral.
3. Competitive positioning vs. other exchanges
The move echoes a similar integration by Coinbase, which already partnered with Morpho to expose users to on-chain lending markets.
4. Regulatory nuance
In the U.S., the Genius Act (passed in 2025) prohibits stablecoin issuers from directly paying interest on their stablecoin holdings. However, Crypto.com and Morpho proponents argue that borrowing and lending stablecoins is a distinct activity from “stablecoin issuers paying yields,” thus falling outside the restriction. Egalite said the offering would still be open to U.S. users.
That said, regulators are watching closely. Banking groups have already raised concerns that stablecoin yield products could siphon deposits away from traditional banks.
Challenges and Risks
Smart contract risk & security: As with all DeFi integrations, there is inherent risk in protocol vulnerabilities, exploits, or exploits in underlying platforms.
Volatility & liquidation risk: Wrapped BTC and ETH remain volatile. Borrowers must manage collateral ratios or face liquidations in adverse market moves.
Regulatory headwinds: The distinction between “yield from lending” and “issuer interest payments” may be tested by regulators over time.
Network & integration complexity: Ensuring smooth bridging, wrapping/unwrapping mechanisms, and user experience on Cronos is nontrivial. Crypto.com will need to execute well for mass adoption.
What to Watch
Launch timing and availability: The first vaults on Cronos are expected in late 2025.
Interest rates and terms: How competitive the borrowing rates will be, how flexible collateralization ratios are, and what types of stablecoins can be borrowed.
Adoption metrics: How many users bridge assets into CDCBTC/CDCETH and participate in borrowing.
Regulatory reactions: How U.S. and international regulators respond, especially in jurisdictions sensitive to stablecoin regulation.
Competitor response: Whether other exchanges without this kind of integration will follow suit, or whether DeFi-native platforms gain leverage.
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In short, Crypto.com’s plan to allow loans using wrapped BTC and ETH represents an intriguing blending of centralized user experience and decentralized finance backend. If executed well and accepted by regulators, it could accelerate mainstream adoption of DeFi-style credit and yield services.
